ASA member distributors report median sales increase for Q1
PVF members up 5.9% for first quarter; DSO numbers creep higher during pandemic
The American Supply Association’s quarterly Pulse shows member distributors reported a median sales increase of 4% compared to the same time frame in 2019.
For the trailing 12 months, respondents report a median sales growth of 3.6%. Those numbers compare to 5.5% sales growth in Q4 2019 compared to the same time frame a year earlier, and a trailing 12-month total of 5.1% looking back at Q4 2019. Inventory rose 4.6% for the first quarter of 2020 vs. the first quarter of 2019.
“This quarter will forever be remembered as the quarter that the COVID-19 pandemic began to exert a major impact on the industry as well as the overall global and domestic economies,” notes Industry Insights, which prepares the Pulse report for ASA member companies. “As many stay-at-home orders began to be issued throughout the United States after March 15, it did not fully begin to impact the industry until late in the quarter. Up to that point, some were experiencing strong results for much of the quarter. As such, the first quarter shows mixed results with smaller firms reporting sales declines, while larger firms still were able to report growth in the quarter vs. last year.”
The median three-month days sales outstanding is 43.5 days for the first quarter of 2020. Industry Insights says it will be critical to monitor the DSO over the next quarter as some already have reported receivables increasing through mid-April at the time of the release of the Pulse report. The Q4 2019 DSO median for all ASA member respondents was 41.
Just over 25% of participants in the Pulse survey report flat gross margin percentages for the first quarter 2020 vs. the first quarter of 2019, with a nearly equal split among the remaining companies reporting increases (39%) vs. decreases (36%).
Company year-to-date profit before tax increased for 50% of the respondents. More than 55% of the respondents reported having more full-time-equivalent employees vs. a year ago. Industry Insights also notes this will be an important measure to monitor over the coming quarter.
Industrial PVF respondents report a median sales increase of 5.9% compared to the same time frame in 2019. For the trailing 12 months, PVF respondents report a 0.5% decrease. Inventory rose 1% for the first quarter of 2020 vs. the first quarter of 2019.
That 5.9% growth compares to a 3.3% total for Q4 2019 (vs. same time frame a year ago). The Q4 2019 trialing 12-month total for PVF folks was 2.9%.
The median three-month days sales outstanding for PVF respondents is 50.1 for the first quarter 2020 (43.3 for Q4 2019), while 20% of PVF respondents report having more full-time equivalent employees than a year ago.
In terms of economic indicators, Industry Insights noted the real GDP for the fourth quarter has been released at a 2.1% growth. For the first time since October 2018, total wholesale sales growth exceeded inventory growth. Inventories reported a decline in January and February, while wholesale sales grew 2.7% and 1.1%, respectively.
Economic activity in the manufacturing sector contracted each of the last five months of 2019 then expanded in January and February only to begin to contract as much of the country did in late March, as reported by the PMI — a reading of 50% or more indicates an expansion in the manufacturing sector.
Industry Insights added the stay-at-home orders and forced closures of many businesses in mid-March caused unemployment shifts of historical proportions. The unemployment rate jumped from 3.5% in February to 4.4% in March. The weekly initial claims for unemployment leaped from a four-week average of 214,000 in February to 2.4 million in March. In the week ending April 4, more than 6.6-million people had filed initial claims for unemployment.